Housing credit to grow by 8-10% in FY’22

Housing finance companies (HFCs), having suffered from a growth slowdown and asset quality issues in wholsesale, are bracing for an even more challenging environment in the current fiscal due to Covid-19 induced disruptions. However, ICRA surmises that a gradual acceleration in demand for housing credit is fuelling a recovery in disbursements over the past two quarters, thereby providing some hope of incremental growth trajectory.

Sachin Sachdeva, Vice President and Sector Head, Financial Sector Ratings, ICRA, commented, “Given the cash flow stress faced by the borrowers, the overdues of HFCs have increased in 9M FY2021 as reflected by proforma (assuming no asset classification dispensation as per Honourable Supreme Court’s order) GNPAs of around 2.7% as on December 31, 2020 as compared to reported GNPA of 2.4% as on March 31, 2020. The asset quality indicators could be further impacted in Q4 FY2021. ICRA estimates the reported GNPAs for FY2021 to be higher by 50-100 basis points, compared to FY2020, and the same to remain elevated in FY2022 as well.”

With revival in demand for housing credit, most HFCs have already attained near pre-Covid level disbursements and are targeting even higher disbursements in Q4 FY2021, thereby pushing the growth rate for FY 2021 to 6-8%. Furthermore, ICRA estimates the growth of 8-10% for on-book portfolio of HFCs in FY 2022.